27 May 2023 – The Hindu

A Way Out of the Coal Trap

Context:

• India wants to halt building new coal-fired power plants, apart from those currently in the pipeline, by eliminating a key clause from the final draft of its National Electricity Policy (NEP), in a big boost to fight climate change.

Status of Coal based Thermal power in India:

• India is the world’s second largest coal producer and importer, with the world’s fourth largest reserves, but a dramatic spike in power demand means supplies are no longer enough.
• Fossil fuel derived energy generation: Thermal power based on fossil fuel such as coal, natural gas and diesel accounts for 80% of the country’s generating.
• Nearly half of India’s installed electrical producing capacity is made up of coal.
• According to the Central Electricity Authority (CEA), in addition to the approximately 27,000 MW now being built, an additional capacity of roughly 16,000 MW of coal-based capacity will be needed in order to meet the demand for electricity in 2029–2030.

India’s potential for energy production:

• The majority of the nation’s energy demands are met by coal.
• In the previous four decades, India’s commercial primary energy consumption has increased by nearly 700%.
• India currently consumes roughly 350 kgoe/year of commercial primary energy per person, which is far less than that of wealthy nations.
• According to the BP Energy Outlook 2019, coal will make up less than half of India’s primary energy use by 2040, from 56% in 2017.
• If India’s peak power consumption increases at a 5% annual growth rate, it will reach 301 GW by 2030.
• Much of it can be covered by India’s planned solar power, which is expected to double from 109 GW to 392 GW by 2030.
• Furthermore, by spending on renewable energy and storage, it will result in annual savings of Rs 43,219 crore.
• In 2030, renewable energy sources, such as small hydro, pumped hydro, solar, wind, and biomass, are anticipated to make up 31% of the energy mix, up from the present 12%.

Problems of Concern:

• Impending coal crisis: According to CRISIL, in order to “avert a possible crisis,” India’s coal-fired plants, which generate more than 70% of the country’s electricity, may need to raise imports by 50% to 60% in April to December 2023.
• Despite a rise in generation capacity, the plant load factor of thermal power plants has decreased from 78% in 2009–10 to 61% in 2018–19.
• The ratio of a power plant’s actual production to the greatest output it is capable of producing is known as the “plant load factor” (PLF).
• When compared to central generators, private and state-owned generators have the lowest PLF, driving up costs.
• Low PLF indicates idle thermal power plants, which could be caused by a lack of fuel (coal or gas), excess capacity, low demand for electricity, or demand being met by other sources.
• According to the Standing Committee on Energy’s 2017 report, the primary issue with the electricity sector is inefficient capacity utilisation.
• weak discoms’ financial standing, which reduces demand for electricity and capacity utilisation
• The solar tariff has been decreased, and its gestation period is extremely short.
• Due to interstate river water disputes, the share of hydropower has declined from 25% in 2007-2008 to roughly 13% in 2018-19.
• Poor Condition of Discoms: Despite the adoption of UDAY (Ujwal Discom Assurance Yojana), outstanding dues of discoms have escalated.
• Less new investment is being made in the power sector, especially by the business sector.
• The cross-subsidy regime and high industrial/commercial tariffs have a negative impact on the competitiveness of the industrial and commercial sectors.
• Inequitable distribution and high renewable energy costs:
• Around 75 to 80 percent of the overall cost for the discoms is spent on buying power from a thermal power plant.
• According to NITI Aayog, due to their higher cost, poor states are generally less eager to purchase renewable electricity.
• Around 75 to 80 percent of the overall cost for the discoms is spent on buying power from a thermal power plant.
• High losses in the AT&C (Aggregate Technical and Commercial) category
• It is a measurement of both energy loss (technical loss, theft, and billing inefficiency) and commercial loss (payment default and collection inefficiency).
• The AT&C losses for 13 states as of September 2019 are 21.4%.

Measures the government has taken:

For the Development of the Coal Sector:

• An ambitious Action Plan for FY 2023–2024 has been developed by the Indian Ministry of Coal with the goal of advancing new technologies, efficiency, and production in the coal industry.
• The UTTAM (Unlocking Transparency through Third Party Assessment of Mined Coal) App for monitoring coal quality was released by the Ministry of Coal in 2018.
• The app intends to improve transparency and effectiveness in the process of monitoring coal quality and increase public access to coal governance.
• Through a reverse auction, a new coal linkage policy has been adopted to guarantee a sufficient supply of the fuel to power plants.
• The new strategy will aid in assuring organised fuel supplies to the power plants.
• The Online Coal Clearances System would give investors a single point of entry to submit online requests for all licences, clearances, and approvals issued by the Ministry of Coal.
• The Coal Allocation Monitoring System (CAMS) is designed to transparently track the allocation of coal by CIL to States, to SNA, and to such users.
• opening up of the private sector to commercial coal mining for Indian and foreign businesses.
• The CCEA approved the process for selling coal mines and blocks by auction in 2018.
• Commercial coal mining is permitted, and 50 blocks will be made available to the private sector.
• Entry requirements will be relaxed as a result of the elimination of the rule requiring “washed” coal for power plants.
• Instead of being a fixed cost, coal blocks would be made available to private businesses on a revenue-sharing basis.
• The income share will be reduced as an incentive for coal gasification or liquefaction.
• Rights to extract coal bed methane (CBM) from coal mines owned by Coal India will be put up for auction.

For the development of the power sector:

• 500 GWhr of storage under the PLI scheme (a government incentive programme).
• All rural houses without power are guaranteed to have one thanks to the Saubhagya scheme.
• Privatising DISCOMs, as done in Dadra Nagar Haveli and Chandigarh.
• The Deendayal Upadhyaya Gramme Jyoti Yojana (DUGJY) is a three-year initiative by the Ministry of Power to provide electricity to 18,500 villages. 3,500 of these villages would receive electricity via off-grid or renewable energy sources.
• The Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY), the former program’s rural electrification component, has been included into the present programme.
• The main elements of the new scheme are feeder separation, sub-transmission and distribution network strengthening, metering at all levels (input points, feeders, and distribution transformers), microgrid and off-grid distribution network, and the completion of rural electrification projects already authorised under the RGGVY.
• Coal Mines (Special Provisions) legislation, 2015: The legislation assigns coal mines and vests the right, title, and interest in and over the land and mine infrastructure to successful bidders and allottees in order to assure the continuity of coal mining operations and coal production.
• This will help to address the issue of fuel shortages for electricity generating.
• The Indian government has decided to transfer mining licences and award forest clearances to successful bidders for coal blocks.
• It anticipates that operations will start in about ten more mines by March 2016, easing the need for coal supplies for the mines’ related projects.
• Two national-level initiatives are being introduced by the Ministry of New and Renewable Energy to encourage the growth of solar rooftop systems:
• Off-Grid & Decentralised Solar Applications as well as the Grid Connected Rooftop & Small Solar Power Plants Programme.
• Five brand-new plug-and-play ultra mega power plants (UMPPs) with a cost of about Rs 1 lakh crore would be constructed.
• The Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan (PM-KUSUM) Scheme was introduced by India to promote energy and water security, de-dieselize the agricultural industry, and increase farmer income through the production of solar electricity.

Conclusion:

• To instill payment discipline throughout the electrical sector’s supply chain and to maintain cost recovery as a key indicator, continuing activities like the introduction of smart metres, network strengthening, and the empowerment of regulators are essential. By increasing the GDP, India will be able to reach its objective of having a $5 trillion economy by 2024. Additionally, it will assist in achieving the Paris Agreement’s targets for renewable energy and the Global Sustainable Development Goals.